Economic marginalisation.

For those looking for answers to the crisis in liberal democracy, this may well be it.

In yesterday’s post Tensions abound in many societies I offered a viewpoint that the ‘left’ arguing with the ‘right’ in politics was utterly inappropriate. Simply for we, as in the people who live on this planet, have to start working together if we wish to have a future for mankind on Planet Earth.

Yesterday’s post also referred to Inductive and Deductive Reasoning with me proposing that the future had to be built on a universally acknowledged relationship between ’cause’ and ‘effect’. A relationship that was built on a clear axiom, or theorem; as we see all around us in both the physical and natural worlds.

This idea does take a little time to filter through and I would be the first to say that I had to spend quite a while reflecting on the idea to fully understand the difference, the power, of deductive reasoning. Plus how something that was a behaviourial ‘law’ could be seen as much as an axiom as is, for example, the calculation of the speed of light, or the relationship of gravity to mass.

So returning to economics.

Quite recently there was an essay published on The Conversation blogsite written by Professor Andrew Cumbers of the University of Glasgow.

His thesis is that there is a direct relationship between “… about how well dispersed economic decision-making power is and how much control and financial security people have over their lives.

That relationship is the core message of his essay.

In other words, as I see it, there is an axiom, a theorem, that governs the relationship between the leadership process of a country and the degree to which that country’s society could be classed as a democratic society.

Here is Professor Cumbers’s essay as published by The Conversation blogsite and republished here within the terms of The Conversation.

ooOOoo

New index of economic marginalisation helps explain Trump, Brexit and alt.right

January 12, 2017 10.03am EST

Author:
image-20170111-4585-12s1o8d
“My fellow disenfranchised Americans …” EPA

If 2016 brought Brexit, Donald Trump and a backlash against cosmopolitan visions of globalisation and society, the great fear for 2017 is further shocks from right-wing populists like Geert Wilders in Holland and Marine Le Pen in France. A new mood of intolerance, xenophobia and protectionist economics seems to be in the air.

In a world of zero-hour contracts, Uber, Deliveroo and the gig economy, access to decent work and a sustainable family income remains the main fault line between the winners and losers from globalisation. Drill into the voter data behind Brexit and Trump and they have much to do with economically marginalised voters in old industrial areas, from South Wales to Nord-Pas-de-Calais, from Tyneside to Ohio and Michigan.

These voters’ economic concerns about industrial closures, immigrants and businesses decamping to low-wage countries seemed ignored by a liberal elite espousing free trade, flexible labour and deregulation. They turned instead to populist “outsiders” with simplistic yet ultimately flawed political and economic narratives.

Much has been said about the crisis of liberal political democracy, but these trends look inextricably linked with what is sometimes referred to as economic democracy. This is about how well dispersed economic decision-making power is and how much control and financial security people have over their lives. I’ve been involved in a project to look at how this compares between different countries. The results say much about the point we have reached, and where we might be heading in future.

The index

Our economic democracy index looked at 32 countries in the OECD (omitting Turkey and Mexico, which had too much missing data). While economic democracy tends to focus on levels of trade union influence and the extent of cooperative ownership in a country, we wanted to take in other relevant factors.

We added three additional indicators: “workplace and employment rights”; “distribution of economic decision-making powers”, including everything from the strength of the financial sector to the extent to which tax powers are centralised; and “transparency and democratic engagement in macroeconomic decision-making”, which takes in corruption, accountability, central bank transparency and different social partners’ involvement in shaping policy.

What is striking is the basic difference between a more “social” model of northern European capitalism and the more market-driven Anglo-American model. Hence the Scandinavian countries score among the best, with their higher levels of social protection, employment rights and democratic participation in economic decision-making. The reverse is true of the more deregulated, concentrated and less democratic economies of the English-speaking world. The US ranks particularly low, with only Slovakia below it. The UK too is only 25th out of 32.

 Economic Democracy Index, figures from 2013. Andrew Cumbers
Economic Democracy Index, figures from 2013. Andrew Cumbers

Interestingly, France ranks relatively highly. This reflects its strong levels of job protection and employee involvement in corporate decision-making – the fact that the far right has been strong in France for a number of years indicates its popularity stems from race at least as much as economics.

Yet leading mainstream presidential candidates François Fillon and Emmanuel Macron are committed to reducing France’s protections. These are often blamed – without much real evidence – for the country’s sluggish job creation record. There is a clear danger both here and in the Netherlands that a continuing commitment to such neoliberal labour market policies might push working class voters further towards Le Pen and Wilders.

One other notable disparity in the index is between the scores of Austria and Germany, despite their relatively similar economic governance. Germany’s lower ranking reflects the growth of labour market insecurity and lower levels of job protection, particularly for part-time workers as part of the Hartz IV labour market reforms in the 1990s that followed reunification.

The index also highlights the comparatively poor levels of economic democracy in the “transition” economies of eastern Europe. The one very interesting exception is Slovenia, which merits further study. It might reflect both its relatively stable transition from communism and the civil war in the former Yugoslavia, and the continuing presence of active civil society elements in the trade union and cooperative movements. Southern European economies also tend to rank below northern European countries, as does Japan.

Poverty and inequality

The index provides strong evidence that xenophobic politics may be linked to changing levels of economic participation and empowerment – notwithstanding the French data. We found that the greater the poverty and inequality in a country, the lower the rates of economic democracy.

These findings suggest, for example, that the Anglo-American-led attack on trade unions and flexible labour policies may actually drive up poverty and inequality by cutting welfare benefits and driving up individual employment insecurity. While the OECD itself advocated these policies until recently, countries with high levels of economic democracy such as Norway, Denmark and Iceland have much lower levels of poverty than countries such as the US and UK.

 Far right activists in Budapest, Hungary, February 2016. EPA
Far right activists in Budapest, Hungary, February 2016. EPA

Far-right populism is on the march everywhere, including the Nordic countries. But Brexit, Trump and the more serious shift to the far right in Eastern Europe have been accompanied by diminishing economic security and rights at work, disenfranchised trade unions and cooperatives, and economic decision-making concentrated among financial, political and corporate elites.

We will monitor these scores in future to see what happens over time. It will be interesting to see how the correlations between economic democracy, poverty and voting patterns develop in the coming years. For those looking for answers to the crisis in liberal democracy, this may well be it.

ooOOoo

 I shall be writing to Professor Cumbers asking if my analysis of that relationship is supported by his research.

For if it is then we do have a very clear axiom that few would disagree with. That is the political consensus this world needs now.

Oh, and we will be back to dogs tomorrow! 😉

22 thoughts on “Economic marginalisation.

  1. A well researched and well written article. Sociology and economics at its best.

    A crisis in a democracy has definitely occurred here in the States and in other countries with similar political patterns. My fear is that the current state of government will be the undoing of the US. We are supposed to be a world leader or maybe not. At the present time, congress and the senate are desperate to hold true to the standards of right-wing politics even at the expense of what is morally correct. The politicians are hell bent on standing up for Trump even when it is obvious there is corruption. No president has ever gone into office without releasing their tax records. I have to wonder why no one says enough is enough. But that is just one facet of what is wrong with this election. I so hope the man proves me and many others- wrong.

    When poverty, unemployment and the lack of decent morals arises in a society then it is a natural occurrence for people to lose all reasoning and common sense. Thus the odd choices of voting. Greed of course, enters the picture when there is economic disparity. Societal norms are no longer applicable. This is a topic that has limitless possibilities for debate. I can’t think of an analogy from nature that is suitable for use here. Maybe if I wracked my brain I could come up with one. Right now I feel that the politicians already present in Washington are wearing blinders befitting a draft horse.

    I probably strayed from the crux of this post but in general I hope I haven’t jumped the rails too much. 🙂

    1. Yvonne, your reply alone has rewarded me for publishing this. I must be honest and admit that I was uncertain whether I should. But that Economic Democracy Index struck me so powerfully that I was compelled to go with the post.

      I have sent an exploratory email to Professor Cumbers in Glasgow and I have my fingers very tightly crossed that he will respond. Because I want to ask him if he believes there is a verifiable connection, as in cause and effect, between the Economic Democracy rating for a country and the quality of that country’s democracy.

      All will be shared in this place, as and when the Professor and I can exchange views.

  2. Very interesting in several ways, including pride and prejudice. Dear Professor Cumbers’ analysis on France is WRONG. He wants to make the point the French are racist. This is unfair and not conducive to the advancement of civilization, as it will make the French angry with the insult. Worse: this is not what is happening.

    Contrarily to what the good professor is saying the popularity of Le Pen is due to her nationalist, not racist, discourse. Her main support is ex-communists and workers, similarly to Trump, and for the exact same reason. Her solutions are similar to Trump’s (with the twist that she wants to re-introduce the French Franc, just like the Swiss Franc).

    Moreover, Le Pen is not racist. But she is definitively for Frexit (which she will not get).
    France has idiosyncrasies: 6 millions civil servants, more than the UK (where doctors are all civil servants, whereas not so in France).
    Fillion’s program wants to reduce severely the civil sector (interestingly civil servants are for him…)
    France has too much regulations, too much entrenched interests, etc. The Socialists are completely deconsidered (they talked against the right, then did like the right, similarly to Obama, except in the US, Obama was not detected).

    Notice also that the population of France is 67 millions. That’s about TWICE the population of all the countries preceding France, in the classification above, combined. Differently from them, France is at war against Fundamental Islam in around ten countries as we write: this stretches the French budget, and causes other “tensions”.France also has the second thermonuclear deterrent of the West, and completely independent of the US: the French nuclear submarines are around 20 (and all made and conceived in France). Another financial stress.

    I agree with the rest. There is no doubt too that the hostile Anglo-Saxon model has made France’s socioeconomy difficult to sustain. Were I French president, I would ask the Justice Department to indict all leaders of all US tech monopolies (just as a warm-up). As I said precedingly, because France is at war (differently from the others, except the US), this is all unsustainable, or, as Trump would say, obsolete.

    1. Patrice, irrespective of the situation of France, or any of the other countries, that doesn’t negate the correlation that the EDI score presents. That’s the key message. Mind you, I do appreciate you offering your thoughts because I know your time is limited just now. Thank you.

  3. “..countries with high levels of economic democracy such as Norway, Denmark and Iceland have much lower levels of poverty than countries such as the US and UK.”
    Yes, they consistently rate better on so many things – lower rates of infant, child and adult mortality, better health services, better nutrition and lower rates of obesity, feelings of psychological security and happiness, educational attainment, public transport, cleanliness of their cities etc etc.
    I guess Bernie was aspiring to a move towards this sort of society for the US, but unfortunately, in the English speaking developed countries, the ‘socialist/Marxist/communist’ bogey is always raised by the fearmongers and the spokespeople of the greedy. It was amazing that Sanders had the success that he did – hopefully this is an indication of things to come with the young people. (Hopefully, after a couple of years of President Chump, the 3/4 of the American people who did not vote for him might revolt!)
    Re economic insecurity and ignorance, the cautionary words of media researcher George Gerbner to a 1981 US Congressional subcommittee have just rung true : “Fearful people are more dependent, more easily manipulated and controlled, more susceptible to deceptively simple, strong, tough measures and hard-line postures.”

  4. Great topic. So much more to say that relates to the sort of society and Government we should all aspire to having – not just on the topic of ‘equality’ but also about the questions of minority rights, the rights of the general populace today versus the rights of future generations and also, the rights of other sentient creatures that share this planet.
    Oh I do wish we had a ‘Freethinkers’ group here like you and Jean belong to, Paul.

    1. What fabulous replies. Yes, the local Freethinkers group, or to give them their full name, the Humanists & Freethinkers group, keep a fairly low profile. But we find it a wonderful place to safely express views and learn from others.

  5. That was a very interesting read Paul especially to see where the UK comes in this scale.. France doesn’t surprise me at being at being among the top ranking..
    “France ranks relatively highly. This reflects its strong levels of job protection and employee involvement in corporate decision-making – the fact that the far right has been strong in France for a number of years indicates its popularity stems from race at least as much as economics”

    The French are passionate and have strong unity when it comes to standing up for their rights.. Lets not forget how their protests often very volatile burning lorries, dumping dead animals on roads.. They fought for their rights to produce. They are a much bigger country than the UK.. And when the common market first started lots of subsidies were given to plough up orchids in Britain while we lost many of our old apples, our market became flooded with Golden Delicious.. The fishing industries too penalized..
    I think if we had fought as hard and not allowed our industries to go overseas then we too could have been in a stronger position.. But like most things in this world.. Profits come before People..

    Now the People I feel are at that cusp of finding their voices.. Choices are not always the best when given a box to tick and vote with limited options.. But on both sides of the ocean it seem that these choices have now been made and we have to learn to accept and adapt and Yes.. as you say Paul Most Importantly

    WORK TOGETHER!

    🙂 Great thoughts expressed here..
    Sue x

    1. You make some very powerful points. I do so hope, with all my heart, that we are on the cusp of major changes. Millions out there will share our hopes. Otherwise it really will be a case of hoping the last person to leave the planet remembers to turn off the lights.

      What an interesting, scary, uncertain time to be alive! Even an exciting time.

  6. I have just finished a telephone call with the good Professor and, as one might have expected, it’s more convoluted than that article suggests. But Professor Cumbers said that he would welcome more information from me in terms of my idea about the link between economic democracy and a whole slew of other social measures.

    I intend to send him more over the coming days. That email and any replies will be shared with you.

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